Gottex to cut paypackets despite beating its industry
Beating its peers has not been enough for hedge fund investor Gottex Fund Management Holdings, as the Swiss-based investor today recorded a fall in fee-earning assets and a continuation of cost cutting.
Overall, the group said many of its activites ended the year flat, thus beating their loss-making rivals.
In its trading update released this morning, it said this would put it in a strong relative position when seeking new money when investors return to return-making alternative assets.
But this did not help it keep assets last quarter, as investors pulled net $260m from GFM, often fleeing to ‘safer’ cash.
Investment losses and FX movements each reduced total assets by $80m, while a fall in assets of $190m was attributed to other factors such as deleveraging, which is expected to continue to 2014/2015.
Investor appetite for the fund of funds model is low, GFM said, warning it did not expect significant change for at least six months. As a result, asset flows are slow, it added.
GFM’s fee-earning assets fell 10% last quarter, from $8.16bn to $7.34bn.
The group said it aimed to reduce operating costs by 15%, on a like for like basis, this year. This would come primarily by cutting staff compensation costs.
In its guidance, it said the 2011 annual results due in late March would probably show “a small operating profit”, but after financial items and investments were accounted for, they would show “a small net loss”.
Joachim Gottschalk (pictured), chairman, said: “Global uncertainty in financial markets that started in the summer of 2011 did not really abate in the fourth quarter with uncertainty about the euro, global economic recovery, sovereign debt crisis and China’s economy at the forefront.
“We expect uncertainty to remain for the remainder of this year, which will impact investor willingness to make allocation decisions. On the other hand, we expect that we will benefit from the meaningful relative outperformance of our market-neutral flagship products.”
These strategies, for which Gottex is best known, beat their benchmarks by between 2% and 3% last year. However, they had “setbacks” in the third quarter, and by year’s end were between 3% and 8.3% away from making good past losses.
Gottex’s alternative credit strategy and Constellar multi-strategies made 3.8% and 3.4% for the year respectively. In each case this was 9% or more above the benchmark.
Overall funds of funds in the industry lost 5.5% last year, while hedge funds fell 4.8%, according to data providers Hedge Fund Research.
In other activity, Gottex last month launched a US version of its mult-asset endowment fund, which immediately took inflows. It said there was strong demand for outsourced solutions for small- and medium-sized institutional investors.
It said it was also growing areas of absolute return multi-asset investments, Asia and managed account platforms.
In other good news for the group, it said only $75m remains in run-off share classes.